SECURITIES AND EXCHANGE COMMISSION 	Washington, D.C. 20549 	----------------------- 	AMENDMENT NO. 1 TO 	FORM 8-K 	CURRENT REPORT 	Pursuant to Section 13 or 15(d) of the 	Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) March 14, 1996 Response USA, INC. 		Exact name of registrant as specified in charter Delaware 0-20770 52-1441922 (State or other jurisdiction (Commission (IRS Employer) 	of incorporation)	 File Number) 	Identification No.) 11-K Princess Road, Lawrenceville, NJ 08648 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (609) 896-4500 (Former name or former address, if changed since last report) Item 2. Acquisition or Disposition of Assets. 		On March 14, 1996, Response USA, Inc. (the "Company"), through its wholly-owned subsidiary, United Security Systems, Inc. ("USS"), completed the acquisition of all of the outstanding capital stock of Shelton Security, Inc., a New Jersey corporation ("SSI"), in exchange for $1,453,052 (of which $231,435 was paid by the issuance of a promissory note bearing interest at the rate of 10% per annum, payable on October 21, 1996). SSI is engaged in the installation, servicing and monitoring of electronic security systems. Substantially all of SSI's assets and liabilities except its monitoring accounts were retained by the former stockholders of SSI. 	EXHIBITS Exhibit 1 Stock Purchase Agreement by and among United Security Systems, Inc., and Michael Schleimer (previously filed). Exhibit 3		Financial Statements UNAUDITED PRO FORMA FINANCIAL STATEMENTS The following unaudited pro forma combined statement of operations for the nine months ended March 31, 1996 and 1995, give effect to the Company's acquisition of Shelton Security, Inc. as of March 14, 1996 (SSI), MSG Security Systems,Inc. as of February 26, 1996 (MSG) and Monitoring Acquisition Corp. as of February 29, 1996 (MAC) as if such acquisitions had been completed at July 1, 1994. The historical information pertaining to SSI, MSG and MAC is for the period prior to its date of acquisition. The pro forma information is based on the historical financial statements of the Company, SSI, MSG, and MAC, giving effect to the transactions under the purchase method of accounting and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma financial statements. The following unaudited pro forma combined balance sheet gives effect to the Company's acquisition of SSI, MSG and MAC as if such acquisitions had been completed at March 31, 1996. In the preparation of the pro forma combined balance sheet, the columns pertaining to SSI, MSG, and MAC contain information as to the assets and the liabilities acquired as of their respective dates of acquisition. These pro forma statements of operations may not be indicative of the results that actually would have occurred if the acquisitions had occurred on July 1, 1994. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1995 Historical Pro Forma ------------------------------------------- ---------------------------- Response SSI MSG MAC Adjustments Combined ------------------------------------------- ------------ ------------- OPERATING REVENUES Product sales $3,785,543 $282,545 $68,774 $4,136,862 Services 2,412,469 715,744 110,015 140,548 3,378,776 Finance and rentals 745,243 7,192 23,625 776,060 ------------------------------------------- ------------ ------------- 6,943,255 1,005,481 202,414 140,548 0 8,291,698 ------------------------------------------- ------------ ------------- COST OF REVENUES Product sales 2,375,608 189,305 37,003 2,601,916 Services and rentals 626,933 413,984 30,216 22,148 (201,847)(G) 891,434 ------------------------------------------- ------------ ------------- 3,002,541 603,289 67,219 22,148 (201,847) 3,493,350 ------------------------------------------- ------------ ------------- GROSS PROFIT 3,940,714 402,192 135,195 118,400 201,847 4,798,348 ------------------------------------------- ------------ ------------- OPERATING EXPENSES Selling, general and administrative 5,110,309 368,913 118,413 96,594 5,694,229 Depreciation and amortization 834,172 2,679 1,163 72,775 (72,775)(A) 1,162,369 324,355 (B) Termination benefits cost (392,699) (392,699) Interest 703,356 1,130 1,310 69,838 (72,278)(C) 1,224,069 520,713 (D) ------------------------------------------- ------------ ------------- 6,255,138 372,722 120,886 239,207 700,015 7,687,968 ------------------------------------------- ------------ ------------- INCOME (LOSS) FROM OPERATIONS (2,314,424) 29,470 14,309 (120,807) (498,168) (2,889,620) INTEREST INCOME 33,082 2,405 630 (18,525)(E) 17,592 ------------------------------------------- ------------ ------------- NET INCOME (LOSS) BEFORE INCOME TAXES (2,281,342) 31,875 14,309 (120,177) (516,693) (2,872,028) INCOME TAXES 3,825 3,125 (6,950)(F) 0 ------------------------------------------- ------------ ------------- NET INCOME (LOSS) ($2,281,342) $28,050 $11,184 ($120,177) ($509,743) ($2,872,028) =========================================== ============ ============= LOSS PER COMMON SHARE ($4.00) ($4.92) ============ ============= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 570,742 12,787 (H) 583,529 ============ ============ ============= NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (A) To eliminate amortization of monitoring contracts and organization costs purchased from MAC. (B) To provide for amortization on the net increase of purchased monitoring contracts. Monitoring contracts purchased from SSI, MSG, and MAC are amortized using the straight-line method over the ten-year estimated lives. (C) To eliminate interest expense on debt not acquired (D) To record additional interest expense on debt incurred in acquisitions. (E) To reduce the Company's interest income due to the use of funds for the acquisitions. (F) To eliminate the current tax provision for SSI and MSG. (G) To reduce expenses to contracted amounts under a monitoring agreement. (H) In calculating earnings per share, effect has been given to the shares issued in the acquisition of MAC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET MARCH 31, 1996 Historical Pro Forma ----------------------------------------- ---------------------------- Response SSI MSG MAC Adjustments Combined ----------------------------------------- ------------ ------------- ASSETS CURRENT ASSETS Cash $840,097 $95,260 $1,635 $0 (96,895)(A) $840,097 Marketable securities 118,750 118,750 Accounts receivable 1,839,400 72,398 19,727 55,920 (148,045)(A) 1,839,400 Note receivable 99,338 99,338 Loan receivable 60,000 (60,000)(A) 0 Inventory 730,315 13,000 3,500 (16,500)(A) 730,315 Prepaid expenses and other current assets 231,891 8,900 525 (9,425)(A) 231,891 ----------------------------------------- ------------ ------------- Total current assets 3,859,791 189,558 25,387 115,920 (330,865) 3,859,791 ----------------------------------------- ------------ ------------- MONITORING CONTRACT COSTS - Net of accumulated amortization 16,944,084 1,228,786 (1,228,786)(A) 16,944,084 ----------------------------------------- ------------ ------------- PROPERTY AND EQUIPMENT - Net of accumulated amortization and depreciation 1,222,162 15,711 5,660 (21,371)(A) 1,222,162 ----------------------------------------- ------------ ------------- OTHER ASSETS Accounts receivable 341,648 341,648 Note receivable 85,142 85,142 Loan to shareholder 99,464 (99,464)(A) 0 Deposits 32,535 32,535 Organization costs 570 (570)(A) 0 Deferred financing costs - Net of accumulated amortization 356,866 356,866 ----------------------------------------- ------------ ------------- 816,191 99,464 0 570 (100,034) 816,191 ----------------------------------------- ------------ ------------- $22,842,228 $304,733 $31,047 $1,345,276 ($1,681,056) $22,842,228 ========================================= ============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $3,572,154 $40,000 $298,426 ($338,426)(A) $3,572,154 N/P - Related party 120,000 (120,000)(A) 0 Accounts payable 545,995 121,735 3,515 (125,250)(A) 545,995 Purchase holdbacks 609,507 609,507 Accrued expenses and other current liabilities 1,281,165 63,034 15,997 36,283 (115,314)(A) 1,281,165 Deferred revenue 1,515,254 28,253 16,055 49,821 (94,129)(A) 1,515,254 ----------------------------------------- ------------ ------------- Total current liabilities 7,524,075 213,022 75,567 504,530 (793,119) 7,524,075 ----------------------------------------- ------------ ------------- LONG-TERM LIABILITIES - Net of current portion Long-term debt 12,525,179 905,667 (905,667)(A) 12,525,179 Purchase holdbacks 72,619 72,619 Deferred revenue 10,252 10,252 ----------------------------------------- ------------ ------------- 12,608,050 0 0 905,667 (905,667) 12,608,050 ----------------------------------------- ------------ ------------- STOCKHOLDERS' EQUITY Common stock 15,516 2,000 100 500 (2,600)(A) 15,516 Additional paid-in capital 14,513,160 14,513,160 Unrealized holding loss on available- for-sale securities (174,593) (174,593) Accumulated deficit (11,643,980) 89,711 (44,620) (65,421) 20,330 (A) (11,643,980) ----------------------------------------- ------------ ------------- 2,710,103 91,711 (44,520) (64,921) 17,730 2,710,103 ----------------------------------------- ------------ ------------- $22,842,228 $304,733 $31,047 $1,345,276 ($1,681,056) $22,842,228 ========================================= ============ ============= NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (A) To reflect the acquisitions of SSI, MSG and MAC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1996 Historical Pro Forma ----------------------------------------- ---------------------------- Response SSI MSG MAC Adjustments Combined ----------------------------------------- ------------ ------------- OPERATING REVENUES Product sales $1,984,146 $149,418 $38,015 $2,171,579 Services 4,689,132 657,744 113,810 332,820 5,793,506 Finance and rentals 1,361,762 7,968 19,007 1,388,737 ----------------------------------------- ------------ ------------- 8,035,040 815,130 170,832 332,820 0 9,353,822 ----------------------------------------- ------------ ------------- COST OF REVENUES Product sales 1,409,579 100,110 22,441 1,532,130 Services and rentals 1,098,089 388,968 25,058 53,900 (188,467)(G) 1,377,548 ----------------------------------------- ------------ ------------- 2,507,668 489,078 47,499 53,900 (188,467) 2,909,678 ----------------------------------------- ------------ ------------- GROSS PROFIT 5,527,372 326,052 123,333 278,920 188,467 6,444,144 ----------------------------------------- ------------ ------------- OPERATING EXPENSES Selling, general and administrative 4,329,022 306,684 116,762 50,068 4,802,536 Depreciation and amortization 1,602,071 3,065 1,162 100,357 (100,357)(A) 1,894,614 288,316 (B) Interest 2,282,864 1,200 1,300 114,116 (116,616)(C) 2,743,415 460,551 (D) ----------------------------------------- ------------ ------------- 8,213,957 310,949 119,224 264,541 531,894 9,440,565 ----------------------------------------- ------------ ------------- INCOME (LOSS) FROM OPERATIONS (2,686,585) 15,103 4,109 14,379 (343,427) (2,996,421) INTEREST INCOME 18,512 3,010 (9,839)(E) 11,683 ----------------------------------------- ------------ ------------- NET INCOME (LOSS) BEFORE INCOME TAXES (2,668,073) 18,113 4,109 14,379 (353,266) (2,984,738) INCOME TAXES 2,200 800 (3,000)(F) 0 ----------------------------------------- ------------ ------------- NET LOSS ($2,668,073) $15,913 $3,309 $14,379 ($350,266) ($2,984,738) ========================================= ============ ============= LOSS PER COMMON SHARE ($2.37) ($2.41) ============ ============= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 1,123,536 112,989 (H) 1,236,525 ============ ============ ============= NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (A) To eliminate amortization of monitoring contracts and organization costs purchased from MAC. (B) To provide for amortization on the net increase of purchased monitoring contracts. Monitoring contracts purchased from SSI, MSG, and MAC are amortized using the straight-line method over the ten-year estimated lives. (C) To eliminate interest expense on debt not acquired (D) To record additional interest expense on debt incurred in acquisitions. (E) To reduce the Company's interest income due to the use of funds for the acquisitions. (F) To eliminate the current tax provision for SSI and MSG. (G) To reduce expenses to contracted amounts under a monitoring agreement. (H) In calculating earnings per share, effect has been given to the shares issued in the acquisition of MAC. 	SHELTON SECURITY, INC. ---------------------- 	FINANCIAL STATEMENTS -------------------- 	SEPTEMBER 30, 1995 ------------------ 	TABLE OF CONTENTS ----------------- 		PAGE ---- INDEPENDENT AUDITOR'S REPORT 	F-2 FINANCIAL STATEMENTS 	Balance sheets as of September 30, 1994 and 1995 	F-3 	Statements of income for the years ended 	 September 30, 1994 and 1995 	F-4 	Statements of stockholder's equity for the years 	 ended September 30, 1994 and 1995 	F-5 	Statements of cash flows for the years ended 	 September 30, 1994 and 1995 	F-6 	Notes to financial statements 	F-7-9 Stockholder and Director Shelton Security, Inc. Old Bridge, New Jersey 	INDEPENDENT AUDITOR'S REPORT 	We have audited the accompanying balance sheets of SHELTON SECURITY, INC. as of September 30, 1994 and 1995, and the related statements of income, stockholder's equity and cash flows for each of the two years in the period ended September 30, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. 	We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. 	In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Shelton Security, Inc. as of September 30, 1994 and 1995, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 1995, in conformity with generally accepted accounting principles. 	As described in Note 8, in March, 1996, the Company distributed to its stockholder substantially all of its net assets other than monitoring and service contracts, and, all of the outstanding common stock of the Company was sold. By:/S/ Fishbein and Company P.C. Elkins Park, Pennsylvania May 9, 1996 	SHELTON SECURITY, INC. ---------------------- 	BALANCE SHEETS -------------- 	ASSETS ------ 	 September 30, --------------------- 	 1994 	 1995 ---------- ---------- CURRENT ASSETS 	 Cash 	$ 42,727 	$ 69,233 	Accounts receivable 	54,882 	10,362 	Due from affiliate 47,443 	24,295 	Due from stockholder 		83,437 	Inventory 	8,513 	9,441 	Prepaid expenses	 8,507 	 8,500 	Deferred taxes	 9,165 	 2,217 --------- ---------- 	 	Total current assets	 171,237 	 207,485 PROPERTY AND EQUIPMENT - Net of accumulated depreciation	 6,842 	 9,528 --------- ---------- 		 $ 178,079 	$ 217,013 ========= ========== 	LIABILITIES AND STOCKHOLDER'S EQUITY ------------------------------------ CURRENT LIABILITIES 	 Demand note payable - bank 	$ 15,000 	$ 	Accounts payable 	123,205 	126,683 	Accrued expenses and other current liabilities 	20,698 	39,756 	Income taxes payable 	4,559 	2,362 	Due to stockholder	 9,964 	Deferred taxes	 	 1,033 ---------- --------- 		Total current liabilities	 173,426 	 169,834 ---------- --------- CONTINGENT LIABILITIES (Note 6) STOCKHOLDER'S EQUITY 	 Common stock - No par value 	 Authorized, issued and outstanding 	 2,500 shares 	2,000 	2,000 	Retained earnings	 2,653 	 45,179 --------- --------- 			 4,653 	 47,179 --------- --------- 			$ 178,079 	$ 217,013 ========= ========= See notes to financial statements. F-3 	SHELTON SECURITY, INC. ---------------------- 	STATEMENTS OF INCOME -------------------- 	Year Ended September 30, ------------------------ 	 1994 	 1995 ------------ ---------- OPERATING REVENUES 	 Services 	$ 473,751 	$ 650,102 	Product sales	 675,577	 627,118 ---------- ---------- 		 1,149,328 	 1,277,220 DIRECT COSTS	 390,302	 421,904 ---------- ---------- GROSS PROFIT	 759,026	 855,316 ---------- ---------- OPERATING EXPENSES 	 Selling, general and administrative 684,447 	800,865 	Interest - Net of interest income of $1,356 - 	 1994 and $4,132 - 1995	 622	 ( 2,890) ---------- ---------- 		 685,069	 797,975 ---------- ---------- INCOME BEFORE INCOME TAXES	 73,957	 57,341 ---------- ---------- INCOME TAXES 	 Current 	4,559 	6,834 	Deferred	 12,107	 7,981 ---------- ---------- 		 16,666	 14,815 ---------- ---------- NET INCOME $ 57,291 $ 42,526 ========== ========== See notes to financial statements. F-4 	SHELTON SECURITY, INC. ---------------------- 	STATEMENTS OF STOCKHOLDER'S EQUITY ---------------------------------- 		 Retained 	 Common 	 Earnings Stock 	(Deficit) 	 Total --------- ---------- --------- BALANCE - SEPTEMBER 30, 1993 $ 2,000 	($ 54,638) 	($ 52,638) 	Net income	 	 57,291 	 57,291 --------- ---------- ---------- BALANCE - SEPTEMBER 30, 1994 	2,000 	2,653 	4,653 	Net income	 	 42,526 	 42,526 --------- ---------- --------- BALANCE - SEPTEMBER 30, 1995 	$ 2,000	 $ 45,179 	$ 47,179 ========= ========= ========= See notes to financial statements. F-5 SHELTON SECURITY, INC. ---------------------- 	STATEMENTS OF CASH FLOWS ------------------------ 	Increase (Decrease) in Cash 	Year Ended September 30, ------------------------ 1994 	 1995 ----------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES 	Net income 	$ 57,291 	$ 42,526 	Adjustments to reconcile net income to net cash provided by (used in) operating activities 	 	Depreciation 	1,710 	2,809 		Deferred taxes 	12,107 	7,981 		(Increase) decrease in accounts receivable	 ( 3,992) 	44,520 		(Increase) decrease in due form affiliate 	( 47,443) 	23,148 		(Increase) decrease in inventory 	( 521) 	( 928) 		(Increase) decrease in prepaid expenses 	( 7,903) 	7 		Increase (decrease) in accounts payable 	( 26,720) 	3,478 		Increase in accrued expenses and other 		 current liabilities 	7,845 	19,058 		Increase (decrease) in income taxes payable	 1,014 	( 2,197) --------- ---------- 			Net cash provided by (used in) operating activities 	( 6,612)	 140,402 --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES 	 Purchase of property and equipment - Net cash used in investing activities	 	( 5,495) --------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES 	 Decrease in demand note payable - bank ( 15,000) 	( 15,000) (Increase) decrease in change in due from/to stockholder	 3,000 	( 93,401) --------- ---------- 			Net cash used in financing activities 	( 12,000) 	( 108,401) --------- ---------- NET INCREASE (DECREASE) IN CASH 	( 18,612) 	26,506 CASH - BEGINNING	 61,339 	 42,727 -------- ---------- CASH - ENDING 	$ 42,727 $ 69,233 ======== ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION 	 Cash paid during the year for: 		 Interest $ 1,978 	$ 1,242 	 	Income taxes 	3,545 	9,031 See notes to financial statements. F-6 	SHELTON SECURITY, INC. ---------------------- 	NOTES TO FINANCIAL STATEMENTS ----------------------------- 	SEPTEMBER 30, 1995 ------------------ 1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 	Nature of Business and Concentration of Credit Risk --------------------------------------------------- The Company's operations consist principally of the sale, installation and monitoring and maintenance services of security and fire alarm systems for residential and commercial properties in the Northern New Jersey area. Accounts receivable are from a large number of customers. 	Use of Estimates ---------------- The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition ------------------- Revenues under contracts for monitoring and service are deferred and recognized ratably over the contract period. The Company recognizes revenue on the sale of alarm systems when installed. 	Allowance for Doubtful Accounts ------------------------------- An allowance for doubtful accounts is provided by the Company, if necessary, based on historical collection experience and a review of the current status of accounts receivable. At September 30, 1994 and 1995, all uncollectible accounts had been written off and, in the opinion of management, no allowance is necessary. 	Inventory --------- Inventory, consisting of alarm systems and parts, is stated at the lower of cost (first-in, first-out method) or market. 	Property and Equipment and Depreciation --------------------------------------- Property and equipment are stated at cost. Expenditures for additions, renewals and betterments are capitalized; expenditures for maintenance and repairs are charged to expense as incurred. Upon retirement or disposal of assets, the cost and accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to operations. Depreciation is provided using the straight-line and declining balance methods over the estimated useful lives of the assets. F-7 	SHELTON SECURITY, INC. ---------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- 	SEPTEMBER 30, 1995 ------------------ 1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 	Income Taxes ------------ The liability method is used in accounting for income taxes. Under this method,deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The principal differences between the Company's financial reporting and tax bases include accounts receivable and property and equipment. 2.	PROPERTY AND EQUIPMENT 	 1994 	 1995 -------- -------- 		Equipment $ 42,581 	$ 43,237 		Vehicles	 	 4,839 -------- -------- 			42,581 	48,076 		Less accumulated depreciation	 35,739	 38,548 -------- -------- 			$ 6,842 	$ 9,528 ======== ======== 3.	DEMAND NOTE PAYABLE - BANK The Company has a $30,000 line of credit. Loans outstanding, if any, bear interest at 1-1/2% over the prime rate, payable monthly, and are collateralized by all assets of the Company and certain personal assets of the Company's stockholder. 4.	INCOME TAXES 	The differences between the provision for income taxes and income taxes computed using the federal income statutory tax rate are as follows: 	Year Ended September 30, ------------------------ 1994 	 1995 ----------- ----------- 		Amount computed using the statutory rate 	$ 11,094 	$ 8,601 	 	Increase (decrease) in taxes resulting from: 		 	State taxes - Net of federal taxes 	5,970 	5,037 			Other 	( 398)	 1,177 --------- -------- 		Income tax expense 	$ 16,666 	$ 14,815 ========= ======== F-8 	SHELTON SECURITY, INC. ---------------------- 	NOTES TO FINANCIAL STATEMENTS ----------------------------- SEPTEMBER 30, 1995 ------------------ 4.	INCOME TAXES (Continued) 	At September 30, 1994 and 1995, the cumulative temporary differences resulted in a deferred tax asset of $9,165 and $2,217, respectively, as a result of accounts receivable and a deferred tax liability of $1,033 as of September 30, 1995 as a result of depreciation. 5.	RELATED PARTY TRANSACTIONS 	The Company leases office space from its stockholder under a month-to-month operating lease. Rent expense under the lease was $8,021 - 1994 and $6,654 - 1995. 	The Company also makes and receives noninterest-bearing advances to and from its stockholder and a Company affiliated by common ownership and management, and the balances are due on demand. Management fees of $10,200 were charged to this affiliate for the year ended September 30, 1995. 6.	CONTINGENT LIABILITIES 	The Company is a defendant in lawsuits incurred in the normal course of business. The outcome of the suits is not anticipated to have a material effect on the financial position, results of operations or cash flows of the Company. The Company anticipates to be fully covered by insurance for these lawsuits. 7.	FAIR VALUE OF FINANCIAL INSTRUMENTS 	Statement of Financial Accounting Standards No. 107, "Disclosure about Fair Value of Financial Instruments," requires disclosure of estimated fair value of all financial instruments for which it is practicable to estimate fair value. 	The carrying amount of cash approximates its fair value because of its short maturity. 	It was not deemed practicable to estimate the fair value of the amounts due from and due to stockholder and due from affiliate, since these financial instruments are not readily marketable. 8.	SUBSEQUENT EVENT 	On March 29, 1996, the Company distributed to its stockholder substantially all of its net assets other than monitoring and service contracts, and, simultaneously, all of the outstanding common stock of the Company was sold. F-9 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RESPONSE USA, INC. -------------------- (registrant) Dated: May 29, 1996 By: /s/RICHARD M. BROOKS --------------------- Richard M. Brooks, President